Hamilton to licence all Payday loans

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An important first step was made today as Hamilton City Hall passed a motion that licences all 33 Payday loan outlets across the city, it’s a first in Ontario. Many of the businesses are located within some of Hamilton’s lowest-earning neighbourhoods, where people in already precarious situations can spiral even deeper into debt.

The motion has three parts. Each lender must pay $750 every year to have an inspector check in on their operations, they have to provide credit counselling information for anyone who comes into one of their outlets and they have to ensure what the actual interest rate they’re charging on the short term loans are.

Currently, those interest rates are staggering. According to this study, a $300 loan from a Payday lender would net a yearly interest rate of 546%, way more than that of an everyday credit card.

The City of Hamilton isn’t alone in this fight against payday loans. On Friday, the Ontario government will announce new powers to credit unions, allowing them to give out small, short-term loans, giving those in need another option.